If the addition of a foreign security to the portfolio of the investor decreases the expected return for a given level of risk, then the security adds value to the portfolio.

Question

Quizplus · Accepted Answer

If the addition of a foreign security to the portfolio of the investor decreases the expected return for a given level of risk, then the security does not add value to the portfolio. Value is added when the security increases the expected return or decreases the level of risk for a given expected return.

If the Addition of a Foreign Security to the Portfolio